2 more property insurance companies scaling back in Florida just 2 weeks into hurricane season

JACKSONVILLE, Fla. – Two weeks into hurricane season, and two property insurance companies in Florida are scaling back policy coverage, citing their vulnerability to natural disasters like hurricanes and flood.

The Farmers Group and AIG made the announcement, and according to the insurance experts, it’s an indication that Florida’s insurance market is still very much in crisis.

Over the past 18 months in Florida, 16 property insurance companies have decided to stop writing new business to new homeowners in one form or the other.

The latest include insurance giants AIG, deciding it will no longer insure houses along Florida’s coastline, and the Farmers Group deciding not to write any new policies at all.

Farmers issued a statement in part reading:

With catastrophe costs at historically high levels and reconstruction costs continuing to climb, we implemented a pause on writing new homeowners policies to more effectively manage our risk exposure.

″We’re seeing a trend of excessive losses when it comes to catastrophes across the US. And that’s whether it’s hurricanes, tornadoes, wildfires, convective summer storms,” Luis Sahagun, Farmers Insurance Spokesman, said.

Insurance Information Institute Spokesman, Mark Friedlander, said new data reveals replacement costs for insurance companies have increased by more than 55%. But the bigger issue for Floridians is the rapid growth of Citizens, the state-backed insurer of last resort.

  • Citizens Property Insurance Corporation now has more than 1.3 million customers.
  • Estimating it will have 1.7 million customers by the end of 2023.

Friedlander said Floridians are paying the highest average premium for insurance in the United States, adding that one major storm this hurricane season, could result in homeowners premiums skyrocketing once again.

″And if we were to be hit with one major storm or a series of storms, it could deplete their reserves,” Friedlander said. ”What happens in that case, all Florida consumers are on the hook to help replenish those funds. Meaning every consumer that has a type of insurance product in Florida, whether it’s a property policy or an auto policy, would see a surcharge on their insurance bills for multiple years to help citizens replenish its reserves.”

Friedlander points out that the good news for all Floridians is that if your insurance company goes out of business and you have a outstanding claim, The Florida Insurance Guarantee Association is in place to ensure you get compensation in case of a storm.

About the Author:

Tarik anchors the 4, 5:30 and 6:30 p.m. weekday newscasts and reports with the I-TEAM.